sevenprophets

An Introduction to Strategic Innovation

Traditional approaches to strategy no longer work as they used to be. There are a number of reasons for that. This presentation outlines a framework for strategic innovation, the hypothesis being that such a new approach enables new competitive advantage. The presentation draws on a number of resources and combines different approaches (like Blue Ocean Strategy and Disruptive Innovation), into a comprehensive framework.

 

Strategic Innovation

View more presentations from Marc Sniukas.

Putting it all together

There's a lot of discussion going on the relationship between Strategic Innovation, Blue Ocean Strategy and Business Model Innovation and how these concepts relate to each other. I gave it a shot. Here's my first draft of an answer: Putting it all together.

Update: I added Christensen's business model framework to the prezi.

In need of some inspiration?

In case you for innovation challenges. Here's a list of 25 stretch goals for management:

1. Ensure that management's work serves a higher purpose. Management, both in theory and practice, must orient itself to the achievement of noble, socially significant goals.
2. Fully embed the ideas of community and citizenship in management systems. There's a need for processes and practices that reflect the interdependence of all stakeholder groups.
3. Reconstruct management's philosophical foundations. To build organizations that are more than merely efficient, we will need to draw lessons from such fields as biology and theology, and from such concepts as democracies and markets.
4. Eliminate the pathologies of formal hierarchy. There are advantages to natural hierarchies, where power flows up from the bottom and leaders emerge instead of being appointed.
5. Reduce fear and increase trust. Mistrust and fear are toxic to innovation and engagement and must be wrung out of tomorrow's management systems.
6. Reinvent the means of control. To transcend the discipline-versus-freedom trade-off, control systems will have to encourage control from within rather than constraints from without.
7. Redefine the work of leadership. The notion of the leader as a heroic decision maker is untenable. Leaders must be recast as social-systems architects who enable innovation and collaboration.
8. Expand and exploit diversity. We must create a management system that values diversity, disagreement, and divergence as much as conformance, consensus, and cohesion.
9. Reinvent strategy-making as an emergent process. In a turbulent world, strategy making must reflect the biological principles of variety, selection, and retention.
10. De-structure and disaggregate the organization. To become more adaptable and innovative, large entities must be disaggregated into smaller, more malleable units.
11. Dramatically reduce the pull of the past. Existing management systems often mindlessly reinforce the status quo. In the future, they must facilitate innovation and change.
12. Share the work of setting direction. To engender commitment, the responsibility for goal setting must be distributed through a process where share of voice is a function of insight, not power.
13. Develop holistic performance measures. Existing performance metrics must be recast, since they give inadequate attention to the critical human capabilities that drive success in the creative economy.
14. Stretch executive time frames and perspectives. Discover alternatives to compensation and reward systems that encourage managers to sacrifice long-term goals for short-term gains.
15. Create a democracy of information. Companies need holographic information systems that equip every employee to act in the interests of the entire enterprise.
16. Empower the renegades and disarm the reactionaries. Management systems must give more power to employees whose emotional equity is invested in the future rather than in the past.
17. Expand the scope of employee autonomy. Management systems must be redesigned to facilitate grassroots initiatives and local experimentation.
18. Create internal markets for ideas, talent, and resources. Markets are better than hierarchies at allocating resources, and companies' resource allocation processes need to reflect this fact.
19. Depoliticize decision-making. Decision processes must be free of positional biases and should exploit the collective wisdom of the entire organization.
20. Better optimize trade-offs. Management systems tend to force either-or choices. What's needed are hybrid systems that subtly optimize key trade-offs.
21. Further unleash human imagination. Much is known about what engenders human creativity. This knowledge must be better applied in the design of management systems.
22. Enable communities of passion. To maximize employee engagement, management systems must facilitate the formation of self-defining communities of passion.
23. Retool management for an open world. Value-creating networks often transcend the company's boundaries and render traditional power-based management tools ineffective. New management tools are needed for building complex ecosystems.
24. Humanize the language and practice of business. Tomorrow's management systems must give as much credence to such timeless human ideals as beauty, justice and community as they do to the traditional goals of efficiency, advantage, and profit.
25. Retrain managerial minds. Managers' traditional deductive and analytical skills must be complemented by conceptual and systems-thinking skill. 

(Source: Harvard Business Publishing) 

Discovering New Customers and Markets

Instead of thinking of your market as a limited space where you need to compete against others and conquer market share, think of how you can create new markets, which don't exist yet, or which might be uninteresting for your competitors. Here's a list of questions to inspire your thinking:

• Who are currently your costumers?
• What are their needs?
• Why are they buying your product? What jobs are customers trying to get done?
• Which customer needs is your product actually fulfilling?
• Are there customers you are not serving now who have similar needs?
• Which customer needs and functions can be satisfied best with the company’s unique competencies?
• Which customers value most what the company does best?
• Are there any existing customer segments being neglected by the industry now? Why are they not being served?
• Which consumers or customer groups share the most commonalities?
• Are competitors serving segments your company is not? Why?
• Is your company serving markets that competitors are not serving? Why?
• Who is the real final customer?
• How can existing assets and capabilities be leveraged?

When identify new customers you might also want to try to switch your focus and how you think about markets and customer segmentation.

Which customers to target?

• existing customers or non-customers (2nd and 3rd tier)
• the most profitable ones or less profitable ones
• the most satisfied ones or less satisfied customers willing to switch easily if a new solution becomes available (1st tier)
• specific buyers or a chain of buyers
• do you focus on differences when segmenting markets or on commonalities? (finer segmentation versus de-segmentation)
• do you focus on attributes of customers and products or on circumstances and the job/need to be done?

Download these and further questions.

Eight Drivers of Innovation at Procter & Gamble

P&G distinguishes between 3 different types of innovation:

1. Commercial innovation, focusing on the new usages of existing products without packaging or product changes.
2. Sustaining innovation, consisting of improvements or extensions of existing products and brands.
3. Disruptive innovation, creating new categories, segments, and sources of consumption.

To make these innovations systemic, P&G sees eight main drivers, at the core of which is the consumer.

1. Motivating purpose and values. Represented through P&Gs slogan "Touching Lives. Transforming Life."
2. Stretching goals: sales growth, margins, free cash flow, net present value, shareholder value, EPS.
3. Choiceful strategies focusing on the core businesses, fast growth, higher margins, and low income consumers and developing markets. Strategies define where to play, how to win and what not to do.
4. Focus on core strengths: consumer understanding, innovation, go-to market capabilities, branding.
5. Enabling organizational structure: organizing for innovation, "just-enough structure", no one-size-fits-all structure.
6. Consistent and reliable systems enabling flexible social processes.
7. Courageous and curious culture, which is purpose driven, open and collaborative.
8. Inspiring leadership, promoting collaboration and connections, courage and integrative thinking.

To sum it up, P&G's approach to innovation focuses on:

1. balancing sustainable + disruptive innovation
2. managing innovation as a social process
3. being customer driven.

(Source: Presentation by Bruce Brown, Chief Technology Offier, Procter & Gamble, MIT Europe ILP Conference, March 26 2009 Vienna)

Is your company innovative?

We know innovation when we see it! Yet what specifically makes us think of a company as being innovative?

BCG asked senior leaders all over the world. Here's what they found. Innovative companies are considered being innovative because they:

• employ innovative operational processes that give them an advantage
• their business model for revenue streams is new and differentiated
• have created unique customer experiences that create loyalty 
• have developed breakthrough products
• have developed breakthrough services.  

(Source: BCG Innovation 2008)

Learn more about how to create these characteristics in our report on Strategic Innovation.

What specific capabilities are critical to innovation success?

BCG's latest innovation report identified the following 8 capabilities to be most critical when it comes to being innovative:

• Developing a deep understanding of customers and their preferences
• Partnering effectively with suppliers and others for new ideas 
• Ensuring executive-level sponsorship of projects 
• Enforcing timelines and milestones 
• Earmarking sufficient funds for innovation projects  
• Moving quickly from idea generation to initial market entry 
• Balancing risks, time frames, and returns across an entire portfolio of projects 
• Fostering a corporate culture that promotes innovation. 

Apart from customer knowledge and executive sponsorship, which most companies see as their strengths, all other 6 capabilities are seen as weaknesses.

(Source: BCG Innovation 2008) 

Welcome the World of Innovation.

The goal of sevenprophets is to answer one question: how can your organization be more innovative?

The site is organized around categories focusing on particular jobs-to-be-done:

• Building innovation capabilities: assess your company's innovation capabilities, create a culture for and of innovation, make innovation everybody's everyday job, organize for innovation and renewal, remove barriers to innovation.
• Creating breakthrough strategies: insights and tools enabling the creation of blue ocean strategy and strategic innovation.
• Developing new business models: business model design and innovation.
• Finding opportunities for innovation and new growth: create new value, disruptive innovation, disrupting the market to create new growth, identify and develop new markets and segments, identify and develop new products.
• Innovation resources: concepts and theories, downloads, tools, templates, links to related sites and blogs, books.
• Leading for innovation: insights on the role of top management, and how innovation processes can be facilitated.
• Management 2.0: is about reinventing management for the new age (i.e. the stuff that Gary Hamel is currently most interested in).

Discussion Guide: Challenging your strategy

Here is a set of questions helping you to think about your strategy, and find some new answers to the old questions of how to differentiate your company from your competitors, and find new paths for growth.

Download Challenging your Strategy

A more comprehensive explanation can be downloaded on this page.

Reshaping Strategy

Strategy as practiced by companies today has many flaws.

"Reshaping Strategy: The Content, Context and Process of Strategic Innovation" synthesises the current debate into a comprehensive framework, allowing companies to address the issues involved from different angles and view points.

It offers a new perspective, new tools and ideas on how to address strategic issues for enabling new growth by developing fresh answers to the classic questions in strategy: what business are you in? who is your customer? and how to organize to fulfill customers' needs?

The paper is structured into three main parts:

Part 1 gives an overview of the current literature on the content and process of strategic management in general, followed by criticism in regard to the content, process, and tools used today.

Part 2 gives a definition, as well as a detailed description of the content, process and context of strategic innovation. Furthermore is offers tools for assessing the innovativeness of strategies and a framework for thinking through the various issues involved in strategic innovation.

Part 3 focuses on managerial implications, and is followed by a summary, and suggestions for further reasearch.

Each chapter contains not only practical advice on how to develop innovative strategies, but offers summaries, along with trigger questions to gain new insights and help challenge managers' and companies' mental models.

The complete guide can be downloaded here.